Académique Documents
Professionnel Documents
Culture Documents
Substantive Tests:
Audit Sampling Using Analytical Procedures as a Substantive Test Other Substantive tests
11-2
11-3
100% examination: this is not a sampling method. Selecting specific items: e.g. high value or high risk this is not a sampling method. Items selected will not necessarily be representative of the population. Audit sampling, reviewed in this lecture
11-4
Non-statistical sampling: sampling approaches that do not have all the characteristics of statistical sampling.
Major advantage is greater application of audit experience or judgement The basic principles and essential procedures identified in ASA/ISA 530 apply equally to both statistical and non-statistical sampling.
11-5
- The auditor performs the required audit procedures on the items selected, projects the results of the audit procedures undertaken on the sample to the population and considers sampling risk. 11-6
11-7
Once the audit objective is specified, such as reliance on controls or misstatement of account balance, the auditor must consider what conditions would constitute an error. The auditor must ensure that the population from which the sample is to be selected is complete and appropriate to the audit objective.
11-8
Stratification
Stratification:
- occurs when the auditor divides the population into a series of subpopulations, each of which has an identifying characteristic, such as dollar value (ASA 530/ISA 530).
- We will use accounts receivable as an example
Can assist with audit efficiency as it allows the auditor to reduce the sample size by reducing variability without increasing the sampling risk. Can direct auditors attention to areas of audit interest, especially risky or material items.
11-9
Sample size is affected by the degree of sampling risk the auditor is willing to accept. Auditor's major consideration in determining sample size is whether, given expected results from examining sample, sampling risk will be reduced to an acceptably low level (ASA/ISA 530.07).
If errors are found in the sample and the quantity exceeds the auditors expectations, then more of the population will need to be tested.
11-10
11-11
11-12
Step 3:
11-13
11-14
Block selection: the auditor selects all items of a specified type processed on a particular day, week or month.
- This is not objectively testing the population and is only proving that for the limited time period that data was satisfactory.
Judgmental selection (based on sample item characteristics): the auditor selects large or unusual items from the population or uses some other judgmental criterion for selection.
- This method has a conscious bias and cannot be considered representative.
11-15
11-16
Audit sampling is useful for tests of controls, especially involving inspection of source documentation for specific attributes such as evidence of authorisation (attribute sampling).
Involves examination of documents for particular attributes related to controls (e.g. authorisation).
Results of attribute sampling can be used to support or refute an initial assessment of control risk.
11-17
A working example:
- The key accounts - Sales Commission expense, (accuracy assertion), and
18
Month
Total sales subject to commission = 790,000 X 6.5 % = $51,350 (estimated value of expense account) Value in Expense account = $ 53,373 Audit test proved satisfactory
19
20
3. Agree the unit $ to ASX reports or Web site. 4. Re-perform Calculation of No. X $ 5. Ensure value $ in final balance is the lower of the cost or market value
6. Now use exception report GAS to print out the same details where Market value $ (total )< Cost Value (total)
7. Select a sample of these balances and check that the lower value is the $ used for the balance sheet
22
23